By Simon Anquetil - August 1, 2014
Tags: entrepreneur, life skills, small business
I was helping my son Aaron,11, with his maths homework last week. His mother had mentioned that she felt he had struggled with certain topics the week before. It was a Wednesday night when he really started getting to the more difficult questions. Unfortunately this was also the evening I had a 7pm conference call, scheduled to suit a client based interstate. So, after dinner, rather than sitting with him like I usually do, I asked Aaron to complete the homework to the best of his ability, saying I would check it after my call. In the end we ran out of time to check it that evening, so I told Aaron we would go through it in the morning. After he went to sleep I read through it and to my utter surprise, there was not one mistake. Even what I presumed to be the difficult question seemed to be a piece of cake for him, with minimal mess on the page. I happily lifted his book from my desk, and proceeded to leave it on the dining room table for him to pack it into his bag for school the next day.
On the way to the table, the book slipped out of my hands and landed on the floor, with the back down and pages open. The page in front of me was creased, as if to mark it. What page did I see staring right back at me? The ANSWERS page. Although I had no proof, the evidence certainly suggested that my son had availed himself of the answers in order to complete his homework with more ease and in less time. Rather than confront him, I decided to rewrite the questions onto a blank page within an exercise book.
In the morning, after he was ready for school, I asked him to do a few maths questions with me, since I couldn’t help him with the questions from the previous night. He wasn’t happy, but he attempted the questions. It was no surprise that he struggled and was not able to produce a perfect answer, as he had done in the previous night’s homework. I began to explain the importance of homework and revision, and of asking questions when you aren’t sure how to handle something, lest you find yourself never learning and continuing to make the same mistakes. “After all,” I recounted, almost hearing my own Dad’s words coming out of my mouth “a mistake is only really bad if you don’t learn from it.” Aaron replied that he didn’t like admitting to not knowing things, because he was scared this made him a failure. He was already ashamed that he was behind his classmates in these particular maths topics, and he thought asking for help would make him seem even less capable. I proposed that it would be a far worse situation to never have the chance to catch up, and feel as if he was behind for the rest of his schooling. I told him it was more important to step up, admit the struggle and seek help. By learning how to solve the problems he would not need to fear inadequacy again.
This leads me to today’s blog article: the importance of failure. There are countless stories of now seasoned Entrepreneurs and CEOs who have had their fair share of trouble in their early careers. Richard Branson shares a great story of the moment he ended up in court for trying to exploit a tiny loophole in the tax system by driving records across borders to sell them at an ever-slightly cheaper price. Had a judge found him guilty on that day, having a criminal record would not have placed him in such an ideal position to run successful companies for the rest of his life. The lesson he learnt? Don’t mess with the system. Branson claims that from that moment on, he avoided the usual schemes that could save him a buck here-and-there at the expense of the State. Did that mistake cost him money at the time? You bet. He paid a fine, needed legal representation, lost a bit of credibility, and lost some stock that he paid for. Did he learn a lesson that outweighed these losses? Absolutely. The risk he took could have ended everything.
I want to take this opportunity to share with you a few other noted ‘failures’ or ‘mistakes’, how they can be applied to your early-stage startup, and what can be learnt from them more broadly. I must thank TechCrunch Fail Week (www.techcrunch.com) for some of the interviews which have led to my following analysis.
Mariam Naficy, Minted
I enjoyed hearing the story of Mariam Naficy of Minted. She was the first-in-market for trying to sell custom printed event stationery online. Naficy had previously sold a business for $100 Million before she branched out to start Minted, with investors money. She had a plan, she a product, she had the resources. She launched the Company with huge dollar signs in her sights. The problem however, was that in the first month of operating, they had only made a single sale. Their conversion rate, she explains, was lower than 0.01%. Naficy recalls that after two months of trading, she had considered shutting up shop and returning whatever money was left to investors. Her reputation, and her investors’ money, were on the line. Rather than do this however, Naficy decided to reflect on her path, and looked back on how she landed there. She was a successful entrepreneur, with a proven gift to build online businesses. She had all the right resources and plans. What had she missed? The answer become clear after they pivoted their business model and started selling crowdsourced stationery. They sold three pieces of something, and Naficy decided to examine that customer’s experience. It was then that she realised, the business up to this point had been about the industry and not the consumer. Naficy rolled back, and examined the user experience from the beginning of the sales process. She examined the market, the competition, and the buying needs. It was then that she saw the need to change the way the customer experienced her store, and in the process their whole product offering and business model changed. The result: the business became hugely profitable and a leader in its market. The lesson: Naficy has become a serial entrepreneur and investor and claims that now she always looks at the user’s needs with a much higher priority. This mistake led Naficy to build a great business, and to apply that lesson to all future business dealings.
Max Levchin, SponsorNet
Max Levchin had an amazing idea back in 1994 when the Internet was truly at its consumer infancy. He wanted to create a way to allow people to sell banner advertising to many websites at a time, and to allow website owners to implement ads on their site for a price. He was building one of the first banner ad networks in existence, and he was trying to do it from a small town and with nothing but personal funding on student credit cards. He had built as much as he could, and started selling his product to customers. The take up was OK, but it was difficult to scale since they had limited resources to travel and sell this ‘new’ idea to people. Then, one day, he read about the launch of DoubleClick. A company whose product did everything that his did, but better. It had more funding than he did. It was based in Palo Alto in the thick of the technology heartland. And his roadmap for future improvements on his own product, was really just a feature-list for their existing product. As a last-attempt at making his product fly, he drove to Chicago with one of his co-founders to pitch the idea to Advertising heavyweights at Leo Burnett.
The meeting was a disaster, and one of the white-haired executive’s first questions following their presentation was “Son, how old are you?” On the long drive home, Levchin realised his company was officially doomed. He had no idea how he would repay his credit card loan. He had no idea how he would front up to his parents who had told him that entrepreneurship was a silly idea. And he sat there in silence not knowing what he would do next. But the long car trip gave him invaluable insights. It was about thirty minutes before they arrived home, that he and his co-founder starting making plans for their next business. An idea that had been brewing for some time – and since they’d already had several hours of silence and broken communication, they decided they may as well get chatting. Levchin says he realised at that moment, that entrepreneurship was exactly the path he wanted, and that his ability to deal with failure by improving on himself and getting to work for the next idea would be what would define him. Failure taught Levchin to be resilient. It taught him that failure itself was something that needed to be accepted. And it taught him that the lessons he learned would always be with him. An important lesson, considering he eventually went on to become a co-founder of Paypal and Slide and he sits on the board of Yelp! and Yahoo.
So there you have it, a couple of examples of successful entrepreneurs who have made mistakes and even had massive failures. Did they give up? No. Did they improve themselves based on their mistakes? Yes. Did failure propel them to greater successes? Absolutely. And it can do the same for you if you accept it as a natural part of business, and indeed as a part of life’s constant journey of learning and growth.